Covid-19 coronavirus: PGG Wrightson backs itself to pay upcoming dividend

PGG Wrightson will pay its upcoming dividend but said the Covid-19 pandemic has made the outlook too murky to keep its annual earnings guidance.

The country's biggest rural services firm said its strong balance sheet and solid first-half result meant it still had capacity to pay a 9 cents per share dividend, or $6.8 million, on April 3. Its net debt was drawn down to $59.3m at December 31, giving it about $60m of headroom under its $50m core facility and $70m working capital facility.

"We also consider that the company has an important role to play in continuing to serve our farming and grower customers through the lockdown as a provider of essential services to the agricultural sector," chair Rodger Finlay said in a statement.

A number of listed companies have cancelled upcoming dividend payments to shore up their balance sheets as they hunker down for the four-week lockdown. However, Wrightson has gone through a radical restructuring over the past year, having sold its seeds business to DLF Seeds.

Last month, Wrightson chief executive Stephen Guerin said he was wary of the short-term impact the Covid-19 outbreak could have on the rural sector, although he remained upbeat about the long-term tailwinds behind New Zealand's agricultural story.

At the time, Wrightson forecast operating earnings before interest, tax, depreciation and amortisation of about $30m for the 12 months ending June 30. However, the company today withdrew that guidance, saying the national lockdown and international response to the pandemic made it too hard to predict the flow-on effects to its trading performance.

In a note to customers, Guerin said the company would continue to operate its network of Rural Supplies and Fruitfed Supplies stores, its essential warehouse supplies facility, Agritrade, and other supporting functions.

Wrightson's livestock saleyards are closed, but the bidr online trading platform will continue operating. The firm's wool and real estate businesses are also closed.

Finlay paid tribute to Wrightson's frontline staff who are working through the lockdown as essential services, and how they're adapting to support the agricultural and horticultural sectors safely.

"I don't doubt that agriculture and horticulture will play a key role in how New Zealand comes through this challenging period and it will also be a critical part of the economic recovery on the other side and PGW will have an important role throughout that story," he said.

Wrightson shares closed at $1.69 yesterday, and have dropped 28.6 per cent so far this year.